New Yorkers know all about co-ops. Our city is full of them.
There are conflicting data out there, but after some research, I discovered that the very first co-op in New York City was a building located on today’s “Billionaire’s Row.” Built in 1881 and located at 152 West 57th Street, it was only six stories high and named “The Rembrandt .” The concept of this particular co-op was created because it allowed the tenants to be closer to the design decisions of the building and gave them more control over the expenses. Designed by Hubert and James W. Pirsson, the Rembrandt was aimed partly at artists, who were presumed to be more accepting of the unconventional. They also said they were looking for “people of means and good social standing”; the advent of the resident-owned building (the co-op board) allowed control over one’s neighbors, which no other apartment house could provide. Groundbreaking in its time.
Now it’s 150 years later, and about 70 % of all for-sale apartments in New York City are co-ops. But this concept has yet to work out to everyone’s benefit. Today, condos are much more fashionable, desirable, and valuable. Co-ops are passé and trading at a significant discount in today’s market. Buyers want the flexibility to do what they want with their real estate. The Gen Xers and Millenials buying now aren’t fans of rules and regulations. They certainly don’t want to grovel to the Boomer Board to get permission.
We all know that in 1985, the board of the San Remo on Central Park West turned down Madonna and refused to let her buy a $1.2 million apartment. The co-op board of The San Remo declined to explain the rejection. Still, she was very well received by the fans of Playboy, where she appeared that same month. Is that why she was denied access? Fame and fortune do not guarantee entry into a co-op building. Notoriety hurts more than it helps. There is a long list of celebrity rejections. Sometimes the reasons are obvious (like Richard Nixon being turned down from 19 East 72nd Street right after the Watergate scandal) to Elizabeth Taylor and Barbara Streisand being turned down by the board at 740 Park Avenue.
In 1997, I worked at a storefront brokerage office in Tribeca. I got the listing for the penthouse in the upstairs building from my office. I advertised the listing, and after a few weeks, I found a wonderful young couple who loved the apartment. They offered full price, agreed to the seller’s terms, and a few days later, signed a contract. The building was a co-op. They submitted a board package and prepared for the board interview. This couple had no pets or children and were more than financially qualified to buy the apartment. After the board meeting, I was notified that they were rejected for reasons that could not be disclosed to me. The shareholders in this downtown loft building didn’t want my buyer’s to be a part of their exclusive club. I couldn’t help but wonder if it was because they were an interracial couple. Clearly, Fair Housing rules only apply to some.
Co-ops allow boards to discriminate arbitrarily; I’d love to see them modernize and become more transparent and equitable.
Side Bar:
Thanks to Ryan Holiday for another excellent book recommendation – Jon Meacham’s new biography of Abraham Lincoln, “And Then There Was Light,” was masterful. Now I have a deeper understanding of why he is so revered. We could use another Abe right now. And I don’t think he would be a fan of the co-ops, either.
Let’s do this.
-Shaun